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US stock futures flat as rate concerns weigh

Written by: Staff
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NEW YORK, June 7 (Reuters) U.S. stock futures pointed to a flat market open on Wednesday as investors remained cautious, with the outlook for interest rates uncertain after warnings about inflation from Federal Reserve Chairman Ben Bernanke and other U.S. central bank officials.

Shares of Yahoo Inc. may be in focus after the Internet company announced it is buying a 10 percent stake in South Korea's No. 2 online retailer Gmarket .For details, see ID:nSEO244788.

On the earnings front, BMC Software and H&R Block Inc. are due to report quarterly results on Wednesday.

Investors were hoping to hear clues about rates in speeches from Fed officials later on Wednesday as the Fed's next policy meeting on June 28-29 approaches.

''There was hope the Fed was going to pause, and then Bernanke's comments two days ago didn't do much to calm investor fears,'' said Andre Bakhos, president of Princeton Financial Group in Princeton, New Jersey.

''The market is trying to peek at the Fed's cards. They're looking for any insight or edge as to what the potential next move is, but I do believe Bernanke set the stage.'' Standard&Poor's 500 futures were up 1.6 points points, slightly above fair value, a mathematical formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.

Dow Jones industrial average futures were up 1.6 points, and Nasdaq 100 futures were up 7 points.

On Monday, Bernanke said the Fed will be vigilant on inflation even if economic growth slows. Comments from Fed officials Susan Bies, William Poole and Thomas Hoenig on Tuesday added to concerns.

Federal Governor Mark Olson will speak at 9:30 a.m. (1330 GMT) and Federal Reserve Bank of Atlanta President Jack Guynn talks at 12:30 a.m. (1630 GMT). Former Fed Chairman Alan Greenspan is due to testify on oil imports before the Senate Foreign Relations Committee at 9 a.m. (1300 GMT).

Trading overseas was mixed on Wednesday as Japan's Nikkei stock average fell to its lowest close since last November. Shares were mixed in Europe before the European Central Bank's interest rate decision on Thursday. Chinese shares fell by their most in four years.

U.S. stocks fell in volatile trade on Tuesday, for the second-straight day, as investors sold off shares of companies sensitive to economic growth cycles and higher interest rates.

In Tuesday's session, the major U.S. stock indexes fell below key technical levels, and the Dow briefly fell below its key 11,000 mark for the first time in three months -- a move, analysts say could put more downward pressure on the market in the days ahead.

Investors will also take a look at results from Tuesday's primaries in eight U.S. states for hints about the congressional elections in November when all 435 seats in the House of Representatives, 33 Senate seats and 36 governorships will be up for grabs.

REUTERS CS BD1650

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